What is the resulting equilibrium price and quantity

Reference no: EM13202517

The widget Industry in Anytown is a monopoly, controlled by Widget Corp. Its demand curve for the local market is given by
P = 800 - 20 W
Where W represents the number of widgets sold per period.
The total cost function (including opportunity or implicit costs) for Widget Corp. is
TC = 300 + 500 W + 10 W2

a. Assuming the industry is unregulated, what are the equilibrium price and output and economic profits earned by Widget Corp.?

b. If the industry is regulated and the regulatory authority forces Widget Corp. to earn only a normal return on investment (which is included in its cost function), what is the resulting equilibrium price and quantity?

c. What happens to consumer surplus? What happens to the economic profits earned by Widget Corp.?

Reference no: EM13202517

Questions Cloud

Determine a salvage value for the beta system : a. Determine the Equivalent Annual Costs of the two alternatives and recommend the economically superior system.b. Determine a Salvage Value for the Beta system such that the Beta system will have an Equivalent Uniform Annual Cost equal to the Alph..

Bridgeports revolving credit agreement : Calculate the charges associated with Bridgeports revolving credit agreement for the month of April - revolving Credit Agreements

Define benefits and m&o costs happen annually : The company interest rate (MARR) is 15%. The company will make a down payment of 25% of the first cost for the Pick-M-Up and 15% of the first cost for Carter's. The loan will have an annual effective interest rate of 10% with annual payments.

What is the net present worth or npw of this investment : The new extruder will increase the company's annual income by $90,000. Maintenance and operating costs are expected to be $4,000 during the first year and to increase by $1,200 each year. XYZ uses a MARR of 12% for its preliminary economic studies..

What is the resulting equilibrium price and quantity : If the industry is regulated and the regulatory authority forces Widget Corp. to earn only a normal return on investment (which is included in its cost function), what is the resulting equilibrium price and quantity. What happens to consumer surpl..

Explain the importance of mergers in oligopolistic markets : (a) What is mean by that Explain "strategic behavior" and relate that to the "Kinked Demand" model of oligopoly. (b) Explain the importance of mergers in oligopolistic markets. Is there much price competition in an oligopolistic market

What are the causes of market concentration : (a) What is market concentration and how can you know whether a market is concentrated or not (b) What are the causes of market concentration (c) Are business mergers good or bad for the economy Explain why

How to reduce the particular type of market failure : Explore the different ways that government can reduce market failure. Please give a specific example of such a regulation and discuss the extent to which you think it has been successful. What other approaches are available to reduce this particul..

Calculate the size of the endowment that will be required : The firm wants to provide a semiannual award of $4500. The foundation will deposi the company's endowment in a fund that pays 3.75% compounded semiannually. The first aware will be made in 14 months. Calculate the size of the endowment that will be..

User Account

All Pages